Hiring Tax Credits and Other Services

At Lima & Associates, we keep up with changes in available Federal and state tax laws and are always looking to help our clients keep more money in their hands. One of the best-kept secrets in bringing profitability into your business comes from claiming your share of the Work Opportunity Tax Credit (WOTC) and other tax credits and incentives.

Many small and mid-size tax preparers miss these valuable tax credits and incentives available to their clients because they are unfamiliar with them or do not closely work with their clients in time to understand their future growth plans or changes in their business. In contrast, at Lima & Associates we have a process in place to timely work with you to understand planned changes to your business, enabling us to best identify and obtain hiring and other tax credit opportunities for you.

Work Opportunity Tax Credits ("WOTC")

This Federal tax credit is available to companies who hire individuals from one of nine economically disadvantaged categories as defined by law (Veterans, Designated Community Residents, etc..).

HOW MUCH OF A TAX CREDIT IS IT?

Generally up to $2,400 per qualified new hire, (40% of the first $6,000 of wages). There are also categories of eligibility which can generate $9,000 in tax credits over a two year period. or up to $9,600 in tax credits against the first $24,000 of income in year one of employment.

HOW MUCH WOULD MY COMPANY GET?

Depending on your industry and typical new hire profile, If you hire 100 people a year on average you can estimate a range of your yearly WOTC tax credits as follows:

Scenario #1 (possible best case)

10 (10%) are WOTC certified and earn at least $4,000 in their first year

10 x $4,000 x .40 = $16,000 tax credit per year

Scenario #2 (more conservative estimate)

6 (6%) are WOTC certified and earn $3,000 in their first year

6 x $3,000 x .40 = $7,200 tax credit per year

Federal Empowerment Zone Tax Credits

This tax credit is available only to companies that are located in a federally designated Empowerment Zone (as determined by H.U.D.) and who hire a portion of their workforce from a designated Empowerment Zone.

HOW MUCH OF A TAX CREDIT IS IT?

Up to $3,000 per zone resident, per year (20% of the first $15,000 of income.) Qualifying employees must work a minimum of 90 days.

Other Available Tax Credits and Incentives

There are many other Federal, State and Local tax credits and incentives potentially available to businesses. While some of these are only available to businesses who are growing, expanding, or changing locations, others are not.